Case of the black coral imports

Friday, February 08, 2013

The U.S. Justice Department said Ashu Bhandari, former president and chief executive officer of U.S. Virgin Islands-based GEM Manufacturing, was sentenced Thursday in federal court in St. Thomas for felony customs violations for his role in a scheme to illegally import protected black coral into the United States.
Bhandari is the last defendant to be sentenced from an investigation into the illegal trade of black coral. “The scheme cost Bhandari’s company, GEM Manufacturing, millions of dollars in financial penalties and sent two of his trading partners to prison,” the Justice Department said.
At Thursday’s hearing, the court imposed a criminal fine of $918,950 and sentenced Bhandari to one month in jail, to be followed by one month of home confinement and one year of supervised release, during which he will be required to complete 300 hours of community service and be banned from any business venture involving coral or coral products.
In addition to the fine, Bhandari is required to pay $229,687 to the University of the Virgin Islands to be used for community service projects designed to research and protect black corals. The court recognized that Bhandari’s sentence was based, in part, on his cooperation with federal investigators in related illicit coral trafficking cases.
On Nov. 7, Bhandari pleaded guilty to one felony count of false classification of goods for his efforts to conceal his illegal importation of internationally protected black coral in 2009. GEM was in the business of manufacturing high-end jewelry and sculpture products that use black coral. Black corals are protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
Bhandari admitted that by 2008, he learned that GEM’s Taiwanese suppliers of black coral could not obtain legitimate CITES certificates. “In spite of this knowledge, he made a ‘business decision to go forward’ with the Taiwanese suppliers. The Taiwanese suppliers would label the coral shipments as ‘plastic’ in order to fool customs authorities in Hong Kong and the United States. Bhandari admitted that by 2009 he knew that the shipments he arranged on behalf of GEM were coming into St. Thomas falsely labeled,” the Justice Department said.
On Oct. 26, 2011, in the related case, U.S. v. GEM Manufacturing LLC, Case No. 2011-19 (D. Virgin Islands), GEM was sentenced to criminal financial penalties and forfeitures exceeding $4.47 million and three and a half years of probation that included a 10-point compliance plan that incorporated an auditing, tracking and inventory control program.
GEM was also banned from doing business with its former coral supplier, Peng Chia Enterprise Co. Ltd. and its management Ivan and Gloria Chu. The Chus were indicted in 2010 for illegally providing black coral to GEM. On June 23, 2010, Ivan Chu was sentenced to serve 30 months in prison and pay a $12,500 fine, while Gloria Chu was sentenced to serve 20 months in prison and pay a $12,500 fine.